Ouster (Ouster (OUST)) shares took a hit in Thursday's premarket session after the lidar company announced it had priced a $200 million underwritten public offering. The stock was down about 5.9% at $56.48 in early trading, but the bigger picture might not be as gloomy as the morning price action suggests.

The Offering Details

Ouster will sell 3,621,876 common shares at $55.22 each, which is roughly in line with where the stock was trading before the announcement. The company expects to rake in about $200 million in gross proceeds before underwriting discounts, commissions, and other expenses. The underwriter also gets a 30-day option to buy up to 543,281 additional shares at the same price, minus discounts.

As for what Ouster plans to do with the cash, the company says it will use the net proceeds for working capital and other general corporate purposes. That's a pretty standard line, but it gives the company some financial flexibility as it continues to push its lidar technology into new markets.

The BABA Compliance Boost

This offering comes on the heels of some positive news for Ouster. The company recently announced that its Rev8 family of OS digital lidar sensors complies with the Build America, Buy America Act (BABA) requirements. That's a big deal because it makes the sensors eligible for U.S. government-funded infrastructure projects.

Ouster said the validation supports the use of its technology across intelligent transportation systems, smart cities, transit networks, and tolling systems. That opens up a whole new revenue stream tied to federal infrastructure spending, which is likely why the stock had been on a tear before this offering.

Technical Analysis: The Bull Case Still Holds

Despite Thursday's weakness, Ouster's technical picture remains pretty constructive. The stock is trading at $56.50, which is still about 25.5% above its 20-day simple moving average (SMA) of $44.86 and a whopping 103.5% above its 200-day SMA of $27.66. That's a long way from being in trouble.

The moving averages themselves are also telling a bullish story. The 20-day SMA is above the 50-day SMA, and the 50-day SMA crossed above the 200-day SMA back in May, forming what traders call a golden cross. That's typically seen as a sign that the long-term trend is turning upward.

Momentum indicators are also on the bulls' side. The moving average convergence divergence (MACD) is still above its signal line, and the histogram is positive. That usually means buying momentum is improving, not fading.

So the big question now is whether this pullback is just a normal pause in a strong uptrend or the start of something more serious. Traders will be watching to see if the stock can establish a higher low before attempting another move higher. Key resistance is at the 52-week high of $63.79, which the stock hit in June. Initial support is near the 20-day SMA at $44.86.

For now, Ouster's story is a mix of short-term dilution concerns and long-term technical strength. The offering might sting today, but the underlying trend and the BABA catalyst are still very much in play.